Chinese Bitcoin Miners Feel Regulatory Heat
Reports continue to emerge that suggest China will place a squeeze on bitcoin miners as part of its wider crackdown on cryptocurrency trading.
As sister-site CCN has reported, Chinese regulators have steadily closed the net around the country’s cryptocurrency ecosystem. The saga began when the People’s Bank of China (PBoC) ruled that initial coin offerings (ICOs) were illegal. Within a week, bitcoin exchanges began to announce their “voluntary” closures, citing the ICO ruling. Exchange shareholders and executives have allegedly been warned not to leave the country while investigators “clean-up” the now-illegal crypto marketplace. Finally, reports surfaced indicating that Beijing officials have told peer-to-peer cryptocurrency trading platforms to shut down their services.
With its foot now firmly planted on the neck of China’s bitcoin trading infrastructure, rumors have begun to emerge that indicate regulators will move against the Chinese cryptocurrency mining industry, which accounts for about 65% of the total bitcoin network hashrate.
To wit, Spencer Bogart, head of research at Blockchain Capital, tweeted that his contacts have told him that “we haven’t seen the worst yet.” He suggested that “the most conservative outcome” would be a blanket ban on peer-to-peer trading, which would still indirectly kill the Chinese mining industry since companies would not have an outlet to trade their BTC for fiat currency. If the government takes a more aggressive stance, however, he warned that China could seize mining facilities and equipment. He also conveyed rumors that some bitcoin exchange executives could face “extreme punishment” for investing customer funds without their consent.
Bogart was careful to state that these reports are unconfirmed, but similar rumors have come from other sources, including the Wall Street Journal. Even more worrisome are comments from miners themselves. Wang Hongyi, an entrepreneur who is in the process of setting up a $1.5 million mining farm in China’s Gansu province, told the South China Morning Post (SCMP) he is concerned about being left without the ability to recover his investment if the ban does materialize:
If we start this business and the government says it’s illegal, then it will be impossible for us to recover our investment
ViaBTC Haipo Yang echoed those worries, telling the SCMP that he is “really concerned about administrative measures that the government might take to shut down mining.”
Fearing the coming storm, LedgerX developer Bryan Bishop warned Yang and his fellow bitcoin miners last week to “make immediate evacuation plans. Hire semi-trucks, load up the equipment, get out right now.”
Unfortunately, if the rumors are true, it might now be too late.